Institutional support to Finanzas Internacionales para la Mujer [FINAM]

After overcoming serious managerial difficulties, FINAM has developed the institutional capacity (including staff, policies, and procedures) needed to implement a credit program for low- income women microentrepreneurs. Further, FINAM has succeeded in expanding the credit program in order to lend $500,000 made available through the Interamerican Development Bank (IDB) after all A.I.D. credit funds had been loaned out. As of 9/92, FINAM had made a total of 779 loans, 572 of them in 1992 alone, and 90% to new borrowers. In addition, FINAM has held the default rate on its loans below 2% while building its staff and management capabilities from ground zero. Prospects for financial stability are uncertain, as FINAM has yet to demonstrate that it can cover operating expenses with operating revenues. One encouraging sign, however, is the receipt of a $40,000 grant from the Government of Chile"s Fund for Solidarity and Social Investment (FOSIS) to cover part of the operating deficit for this year, along with the possibility of additional funding to cover the rest. FINAM"s most serious problem is the unwillingness of the President of the Board to delegate management authority to the General Manager, which has undermined the General Manager"s authority and caused staffing and managerial difficulties. The following lessons were learned. (1) Besides the IDB loan, project success can be attributed to seasonality, an active promotional campaign, and successful implementation of solidarity group lending. (2) Management and administration are critical indicators of institutional capacity building.